SEC News Digest

Issue 2011-21
February 1, 2011

COMMISSION ANNOUNCEMENTS

SEC Charges Eight Individuals and Three Companies in $33 Million International Microcap Fraud

The Securities and Exchange Commission today filed fraud charges against the operators of a $33 million international microcap stock scheme involving the stocks of eight small U.S. companies headquartered in the People's Republic of China, Canada, and Israel.

In a complaint filed in U.S. District Court for the Eastern District of Michigan, the SEC charged three companies and eight individuals with engaging in unlawful spam e-mail campaigns to pump and dump securities of microcap companies. The SEC alleges that each scheme was primarily organized and devised by one or all of the following:

Francis A. Tribble, who is a U.S. citizen and former stock promoter

How Wai Hui (a.k.a. John Hui), who is a dual citizen of Hong Kong and Canada and the former CEO of China World Trade Corp.

Kwong-Chung Chan (a.k.a. Bernard Chan), who is a citizen and resident of Hong Kong and the former CFO of China World Trade Corp.

Gregg M.S. Berger, who is a stockbroker from Yonkers, N.Y.

In a parallel criminal proceeding, the U.S. Department of Justice today unsealed an indictment against Berger, charging him with one count of conspiracy to commit securities fraud and wire fraud. Previously, in related criminal actions, Hui and Tribble pleaded guilty to conspiracy to commit wire fraud, mail fraud and to violate the CAN-SPAM Act, as well as to committing wire fraud and engaging in money laundering for their roles in the scheme to artificially inflate the prices of the securities of several companies, including China World Trade. Hui and Tribble each were sentenced to 51 months in prison for their actions.

"Foreign companies and perpetrators with global connections are increasingly using digital communications and other means in furtherance of their securities fraud schemes in U.S. markets," said Robert Khuzami, Director of the SEC's Division of Enforcement. "But as reflected in today's enforcement actions, U.S. and international law enforcement authorities are joining forces to effectively detect, disrupt and prosecute these frauds. Combating microcap fraud and pump-and-dump schemes, irrespective of where they originate, continues to be a top enforcement priority for the SEC."

The SEC also charged the following corporate insiders for their participation in the pump-and-dump schemes and for engaging in a fraudulent scheme to conceal the sales of millions of shares of their companies' securities:

Xiaoqing Du (a.k.a. Angela Du), who is a dual citizen of Canada and China and CEO and director of Global Peopleline Telecom Inc.

Chi Shing Ng (a.k.a. Daniel Ng), who is a citizen and resident of Hong Kong and CEO and director of China Digital Media Corp.

Shay Ben-Asulin, who is a citizen and resident of Israel and former Chairman of m-Wise Inc.

Mordechai Broudo, an Italian citizen and resident of Israel and former CEO of m-Wise.

The three companies charged are China Digital, Global Peopleline, and m-Wise.

The SEC alleges that at various times between January 2005 and December 2007, each of the defendants engaged in one or more schemes to pump up the price and volume of the securities of one or more of the companies by paying for false spam e-mail campaigns.

According to the SEC's complaint, the false spam e-mails lured investors into the market and drove up demand in the stocks by, among other things, touting non-existent IPOs and acquisitions, presenting an unrealistic picture of the companies' business prospects, providing baseless share price projections, or including false disclaimers. The defendants then dumped millions of shares of these securities into the hyped market through nominee brokerage accounts they opened with Berger, reaping millions of dollars in profits. All eight companies' stocks were dually quoted on the Over-the-Counter Bulletin Board and Pink Sheets.

The SEC's complaint alleges that Tribble masterminded the pump-and-dump schemes with respect to five of the companies, and arranged for the spam e-mail campaigns for two other companies. Berger, a long-time friend of Tribble, played a central role in the schemes by arranging for the pump and dump of m-Wise and facilitating the sales of millions of shares in all eight companies through nominee brokerage accounts. John Hui and Bernard Chan also played key roles in the fraudulent schemes by finding U.S. public shell companies to use in bringing private Chinese companies public through reverse mergers. They arranged for the deposit and sale of stock through nominee brokerage accounts, and coordinated the transfer of the unlawful trading proceeds to pay for the spam e-mail campaigns among other things.

The SEC seeks permanent injunctions, disgorgement and financial penalties against Berger and Chan for violations of the antifraud and registration provisions, and against Angela Du and Global Peopleline for violations of the antifraud, registration, and reporting provisions of the federal securities laws. The Commission also seeks an officer and director bar against Du, and penny stock bars against Berger, Chan, and Du.

Without admitting or denying the SEC's allegations, Tribble, John Hui, Daniel Ng, Ben-Asulin, Broudo, m-Wise, and China Digital have agreed to settle the charges against them. The settlements are pending final approval by the court.

Tribble agreed to a final judgment permanently enjoining him from violating Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Tribble also agreed to pay disgorgement of $2,549,520 and prejudgment interest of $349,208. Tribble consented to be barred from participating in an offering of any penny stock.

John Hui agreed to a final judgment permanently enjoining him from violating Sections 5(a), 5(c), and 17(a) of the Securities Act, Sections 10(b) and 16(a) of the Exchange Act and Rules 10b-5, 13a-14, 16a-2, and 16a-3 thereunder, and from aiding and abetting violations of Sections 13(a) of the Exchange Act and Rules 12b-20 and 13a-1 thereunder. Hui agreed to pay disgorgement of $681,117 and prejudgment interest of $162,717. Hui also agreed to be barred from acting as an officer or director of a public reporting company and from participating in an offering of any penny stock.

Daniel Ng agreed to a final judgment permanently enjoining him from violating Sections 5(a), 5(c), and 17(a) of the Securities Act, Sections 10(b) and 16(a) of the Exchange Act and Rules 10b-5, 13a-14, 16a-2, and 16a-3 thereunder, and from aiding and abetting violations of Sections 13(a) of the Exchange Act and Rules 12b-20, 13a-1, and 13a-11 thereunder. Ng also consented to be barred from acting as an officer or director of a public reporting company and from participating in an offering of any penny stock. China Digital agreed to a permanent injunction from violations of Sections 5(a), 5(c), and 17(a) of the Securities Act, and Sections 10(b) and 13(a) of the Exchange Act and Rules 10b-5 and 13a-1 thereunder. China Digital also agreed to pay disgorgement of $200,000.

Ben-Asulin and Broudo agreed to a final judgment permanently enjoining them from violating Sections 5(a), 5(c), and 17(a) of the Securities Act, Sections 10(b) and 16(a) of the Exchange Act and Rules 10b-5, 13a-14, 16a-2, and 16a-3 thereunder, and from aiding and abetting violations of Sections 13(a) of the Exchange Act and Rules 12b-20 and 13a-1 thereunder. Ben-Asulin and Broudo agreed to be barred from acting as officers or directors of a public reporting company and from participating in an offering of any penny stock. m-Wise agreed to a permanent injunction from further violations of Sections 5(a), 5(c), and 17(a) of the Securities Act, and Sections 10(b) and 16(a) of the Exchange Act and Rules 10b-5 and 13a-1 thereunder. m-Wise, Ben-Asulin, and Broudo agreed to pay, jointly and severally, disgorgement of $400,000.

The SEC acknowledges and appreciates the assistance of the U.S. Attorney's Office for the Eastern District of Michigan, the Department of Justice, Computer Crime and Intellectual Property Section, the Hong Kong Securities and Futures Commission, and the Cyprus Securities and Exchange Commission.

SEC General Counsel David Becker to Leave Commission

The Securities and Exchange Commission today announced that General Counsel and Senior Policy Director David M. Becker will leave the Commission at the end of February to return to the private sector.

Mr. Becker has been the agency's chief legal officer and a senior advisor to Chairman Schapiro since February 2009. During his tenure, he helped shape most of the SEC's major policy and regulatory initiatives and counseled the Commission on virtually every matter that has come before it.

"David's wise counsel has guided the Commission through a gauntlet of complex legal and policy issues. His experience and deep knowledge of the Commission and the securities laws has served the agency and the American people brilliantly," said SEC Chairman Mary L. Schapiro. "Although I knew this was a two-year commitment, I am sorry this day has approached so fast."

Mr. Becker said, "I leave the Commission with the greatest regret. It has been a privilege and a joy to have been a part of the Commission staff and to have worked with dedicated and talented colleagues in the Office of General Counsel and throughout the SEC. I owe particular thanks to Chairman Schapiro for her confidence, leadership, and support. She is making an incalculable difference for the Commission and for investors."

Mr. Becker previously served as General Counsel under Chairmen Harvey Pitt and Arthur Levitt. He first joined the SEC staff in October 1998 as Deputy General Counsel. In January 2000, Mr. Becker was elevated to General Counsel. Upon leaving the Commission in 2002, he served as a partner at the law firm of Cleary Gottlieb Steen & Hamilton LLP.

Mr. Becker began his legal career as law clerk to Judge Harold Leventhal of the Court of Appeals for the District of Columbia, and for Associate Justice (Retired) Stanley Reed of the Supreme Court. He is a graduate of Columbia College and Columbia Law School, where he was editor-in-chief of the Columbia Law Review. (Press Rel. 2011-34)

Securities and Exchange Commission Suspends Trading in the Securities of Eternal Technologies Group, Inc. for Failure to Make Required Periodic Filings

The U.S. Securities and Exchange Commission announced the temporary suspension of trading in the securities of Eternal Technologies Group, Inc. (Eternal Technologies), commencing at 9:30 a.m. EST on Feb. 1, 2011 and terminating at 11:59 p.m. EST on Feb. 14, 2011.

The Commission temporarily suspended trading in the securities of Eternal Technologies due to a lack of current and accurate information about the company because it has not filed periodic reports with the Commission in over two years. This order was entered pursuant to Section 12(k) of the Securities Exchange Act of 1934 (Exchange Act).

The Commission cautions brokers, dealers, shareholders and prospective purchasers that they should carefully consider the foregoing information along with all other currently available information and any information subsequently issued by this company.

Brokers and dealers should be alert to the fact that, pursuant to Exchange Act Rule 15c2-11, at the termination of the trading suspension, no quotation may be entered relating to the securities of this company unless and until the broker or dealer has strictly complied with all of the provisions of the rule. If any broker or dealer is uncertain as to what is required by the rule, it should refrain from entering quotations relating to the securities of this company that has been subject to a trading suspension until such time as it has familiarized itself with the rule and is certain that all of its provisions have been met. Any broker or dealer with questions regarding the rule should contact the staff of the Securities and Exchange Commission in Washington, DC at (202) 551-5720. If any broker or dealer enters any quotation which is in violation of the rule, the Commission will consider the need for prompt enforcement action.

If any broker, dealer or other person has any information which may relate to this matter, they should immediately communicate it to the Delinquent Filings Branch of the Division of Enforcement at (202) 551-5466, or by e-mail at DelinquentFilings@sec.gov. (Rel. 34-63806)

Securities and Exchange Commission Suspends Trading in the Securities of Andresmin Gold Corp. for Failure to Make Required Periodic Filings

The U.S. Securities and Exchange Commission announced the temporary suspension of trading in the securities of Andresmin Gold Corp., commencing at 9:30 a.m. EST on Feb. 1, 2011 and terminating at 11:59 p.m. EST on Feb. 14, 2011.

The Commission temporarily suspended trading in the securities of Andresmin Gold Corp. due to a lack of current and accurate information about the company because it has not filed periodic reports with the Commission in over four years. This order was entered pursuant to Section 12(k) of the Securities Exchange Act of 1934 (Exchange Act).

The Commission cautions brokers, dealers, shareholders and prospective purchasers that they should carefully consider the foregoing information along with all other currently available information and any information subsequently issued by this company.

Brokers and dealers should be alert to the fact that, pursuant to Exchange Act Rule 15c2-11, at the termination of the trading suspension, no quotation may be entered relating to the securities of this company unless and until the broker or dealer has strictly complied with all of the provisions of the rule. If any broker or dealer is uncertain as to what is required by the rule, it should refrain from entering quotations relating to the securities of this company that has been subject to a trading suspension until such time as it has familiarized itself with the rule and is certain that all of its provisions have been met. Any broker or dealer with questions regarding the rule should contact the staff of the Securities and Exchange Commission in Washington, DC at (202) 551-5720. If any broker or dealer enters any quotation which is in violation of the rule, the Commission will consider the need for prompt enforcement action.

If any broker, dealer or other person has any information which may relate to this matter, they should immediately communicate it to the Delinquent Filings Branch of the Division of Enforcement at (202) 551-5466, or by e-mail at DelinquentFilings@sec.gov. (Rel. 34-63807)

SEC Issues Notice of Proposed Modified Distribution Plan and Opportunity for Comment in the Matter of Prime Capital Services, Inc.

The Securities and Exchange Commission announced today that it has given notice, pursuant to Rule 1103 of the Securities and Exchange Commission's Rules on Fair Fund and Disgorgement Plans, 17 C.F.R. § 201.1103, that the Division of Enforcement has filed a proposed modified plan (Modified Distribution Plan) for the distribution of monies in the matter of Prime Capital Services, Inc., et al. The notice informs interested parties of the Modified Distribution Plan and provides instructions for persons wishing to comment in writing.

The Modified Distribution Plan provides for distribution of the $594,263.58 in penalty, disgorgement and prejudgment interest paid by Prime Capital Services, Inc. and its parent company, Gilman Ciocia, Inc., less any federal, state, or local taxes and tax administrator fees. The proposed plan provides for distribution of the monies to eligible investors who purchased variable annuities from Prime Capital Services, Inc.

Previously, on September 23, 2010, the Commission issued a Notice of Proposed Plan of Distribution (Original Plan) and Opportunity for Comment. The Original Plan provided for eligible investors to receive compensation from the Fair Fund for fees and charges relating to their variable annuities and, with any remaining money, compensation for consequential costs, such as attorneys' fees they incurred in private efforts to remedy the harm. The Modified Distribution Plan does not provide for eligible investors to recover consequential costs from the Fair Fund.

A copy of the Modified Distribution Plan may be obtained by submitting a written request to Robert J. Keyes, Associate Regional Director and Chief of Regional Office Operations, United States Securities and Exchange Commission, 3 World Financial Center, 4th Floor, New York, NY 10281-1022. Interested parties may also print a copy of the proposed Modified Distribution Plan from the Commission's public website, http://www.sec.gov. Any person or entity wishing to comment on the Modified Distribution Plan may do so in writing by submitting their comments within 30 days of the date of the Notice (i) to the Office of the Secretary, United States Securities and Exchange Commission, 100 F Street, N.E., Washington, DC 20549-1090; or (ii) via the Commission's Internet comment form (www.sec.gov/litigation/admin.shtml); or (iii) by sending an e-mail to rule-comments@sec.gov. Comments submitted by e-mail or via the Commission's website should include the Administrative Proceeding File Number (Admin. Proc. File No. 3-13532) in the subject line. Comments received will be publicly available. Persons should submit only information that they wish to make publicly available. (Rel. 34-63813; File No. 3-13532)

ENFORCEMENT PROCEEDINGS

Commission Orders Hearing on Registration Suspension or Revocation Against Eternal Technologies Group, Inc. for Failure to Make Required Periodic Filings

In conjunction with this trading suspension, the Commission today also instituted a separate public administrative proceeding to determine whether to revoke or suspend for a period not exceeding twelve months the registration of each class of the securities of Eternal Technologies for failure to make required periodic filings with the Commission:

In the Order, the Division of Enforcement (Division) alleges that Respondent Eternal Technologies is delinquent in its required periodic filings with the Commission.

In these proceedings, instituted pursuant to Exchange Act Section 12(j), a hearing will be scheduled before an Administrative Law Judge. At the hearing, the judge will hear evidence from the Division and the Respondent to determine whether the allegations of the Division contained in the Order, which the Division alleges constitute failures to comply with Exchange Act Section 13(a) and Rules 13a-1 and 13a-13 thereunder, are true. The judge in the proceedings will then determine whether the registrations pursuant to Exchange Act Section 12 of each class of the securities of the Respondent should be revoked or suspended for a period not exceeding twelve months. The Commission ordered that the Administrative Law Judge in each proceeding issue an initial decision not later than 120 days from the date of service of the order instituting proceedings. (Rel. 34-63805; File No. 3-14213

Commission Orders Hearing on Registration Suspension or Revocation Against Andresmin Gold Corp. for Failure to Make Required Periodic Filings

In conjunction with this trading suspension, the Commission today also instituted a separate public administrative proceeding to determine whether to revoke or suspend for a period not exceeding twelve months the registration of each class of the securities of Andresmin Gold Corp. for failure to make required periodic filings with the Commission:

In the Order, the Division of Enforcement (Division) alleges that Respondent Andresmin Gold Corp. is delinquent in its required periodic filings with the Commission.

In these proceedings, instituted pursuant to Exchange Act Section 12(j), a hearing will be scheduled before an Administrative Law Judge. At the hearing, the judge will hear evidence from the Division and the Respondent to determine whether the allegations of the Division contained in the Order, which the Division alleges constitute failures to comply with Exchange Act Section 13(a) and Rules 13a-1 and 13a-13 thereunder, are true. The judge in the proceedings will then determine whether the registrations pursuant to Exchange Act Section 12 of each class of the securities of the Respondent should be revoked or suspended for a period not exceeding twelve months. The Commission ordered that the Administrative Law Judge in each proceeding issue an initial decision not later than 120 days from the date of service of the order instituting proceedings. (Rel. 34-63808; File No. 3-14214

SELF-REGULATORY ORGANIZATIONS

Immediate Effectiveness of Proposed Rule Change

Proposed rule changes filed by The NASDAQ Stock Market (SR-NASDAQ-2011-013); NASDAQ OMX PHLX (SR-PHLX-2011-08); and NASDAQ OMX BX (SR-BX-2011-04) relating to a stockholders' agreement between The NASDAQ OMX Group, Inc. and Investor AB have become effective under Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of January 31. (Rel. 34-63786)

Approval of Proposed Rule Changes

The Securities and Exchange Commission has issued an order approving a proposed rule change, as modified by Amendment No. 1 (SR-NYSE-2010-077), by the New York Stock Exchange to Eliminate the Requirement of an 80% Supermajority Vote to Amend or Repeal Section 3.1 of the NYSE Euronext Bylaws. Publication is expected in the Federal Register during the week of January 31. (Rel. 34-63792)

The Commission granted approval of a proposed rule change (SR-NYSEArca-2010-118) submitted by NYSE Arca pursuant to Rule 19b-4 under the Securities Exchange Act of 1934 relating to the listing and trading of the SiM Dynamic Allocation Diversified Income ETF and SiM Dynamic Allocation Growth Income ETF. Publication is expected in the Federal Register during the week of January 31. (Rel. 34-63802)

The Commission suspended a proposed rule change and instituted proceedings to determine whether to disapprove a proposed rule change (SR-NASDAQ-2011-010), submitted by the NASDAQ Stock Market pursuant to Rule 19b-4 under the Securities Exchange Act of 1934, to link market data fees and transaction execution fees. Publication is expected in the Federal Register during the week of January 31. (Rel. 34-63796)

The Commission is instituting proceedings pursuant to Section 19(b)(2)(B) of the Securities Exchange Act of 1934 to determine whether to disapprove a proposed rule change filed by The NASDAQ Stock Market (SR-NASDAQ-2010-134) to adopt additional criteria for listing commodity stockpiling companies that have indicated their business plan is to buy and hold commodities. Publication is expected in the Federal Register during the week of January 31. (Rel. 34-63804)